A prediction for the U.S. economy

Ah, the art of prediction. It's like asking to look foolish. Nonetheless, my prediction for the U.S. economy is recession in the first quaarter of 2007. But this is not the serious part; the stage has been set for a rapid depreciation of the U.S. dollar (USD), which will deepen the emerging recession, and perhaps lead to a collapse of the banking sector. The real estate market will not recover to anything close to its present inflated value in the forseeable future. I expect housing prices to languish for the next twenty to fifty years without seeing the kind of rapid growth of the 1996-2006 period. I look for this to begin near the beginning of of 2007. Nouriel Roubini of Columbia University and Roubini Global Economics also forecasts recession for 2007.Q1.

What is the basis of this prediction? My economic analysis:

The stock market is behaving quite strangely; the new records set by the Dow Jones have been widely heralded, but the much-broader S&P 500 index, though it has advanced as well, remains 11% off its record of set back in 2000; the NASDAQ is still well below 50% of its previous 'bubble' record.

Meanwhile, the yield curve for Treasury bonds has become inverted, meaning that the yield on long-term bonds is lower than the yield for shorter-term bills and/or notes. This is extremely unusual, for it's generally the case that investors demand a premium for holding a bond for a longer period, and this inversion almost always presages a major recession.

The housing market has begun to disintegrate; the latest data show that median home prices have begun to fall nationwide, (over 2% from July to August, according the National Association of Realtors) and significant cooling has occurred in the nation's hottest markets. The International Monetary Fund issued a study of housing busts recently, finding that a significant decrease in housing prices caused a recession in 19 of the 20 countries studied. Unrealistic hopes for a 'soft landing' are still riding high.

The other major US market to take a hit is the car market. Ford and GM have both announced deep cuts in production, including widespread layoffs and buyouts. Perhaps the decline could have been predicted, for both companies tied themselves to the SUV, which seems to be rapidly fading in popularity given the level of gas prices, notwithstanding the drop in prices in September; the reign of the SUV is clearly over. Apparently, some 'McMansion' builders were offering a free SUV to entice buyers -- a perfect commentary of the state of American society at this moment.

While the U.S. economy has become unbalanced in consumption, the Chinese economy, in some ways operating as our complement, has become unbalanced in the sphere of investment. Chinese cities are pouring money into building infrastructure; real estate prices in some areas are quadrupling each year. Overcapacity and deflation are looming threats. The chaotic rhythm which manifests here in consumption, appears there in saving and investment.

Though I believe the economic facts are compelling, what has given me the conviction and urgency to make this prediction publicly is my spiritual intuition. Spiritual intuition is received continually, in many ways: in the signs and symbols that we notice, in the words of a conversation overheard, in the whisper of grass, in the feel of the sunlight, in sounds and in silence. I have spent many years cultivating the inner connection which makes this intuition intelligeable and reliable. Since intuition is non-rational, while economic theory is rational, a mediation between the worlds is necessary. Anyone can learn to use intuition, and since it has a basis in the Unity of Being, the results of intuition should be the same for everyone, but the manner of expression may differ.

To protect yourself from the depreciation of the dollar, I recommend buying gold. Though gold bears no return under normal circumstances, the economic crisis to come will cause the price of gold to be bid up far above its value, as in period from 1971-1980.